How to let staff go

The current economic climate is showing no sign of improving with leading recruitment and business organisations predicting further redundancies in 2012 as the private sector fails to create new jobs.

Unfortunately as a smaller business, you are likely to feel the strain of market pressures more than the big boys, so you could be forced to make some redundancies in order to protect your bottom line, but how do you do it? It can be an unfamiliar and unpleasant experience as well as providing the potential for legal problems, so here's a quick guide on how to do it correctly.

Selecting workers to make redundant

For your own sake it is important to select the right employees for redundancy, as you don't want to lose vital skills from your business, so make sure you create a balanced workforce if you are planning to trim your staff numbers.

Once you have looked at all the skills your staff have, create a list of employees who would be candidates for redundancy and use yearly appraisals to measure each of their performances, but it is crucial to remember to provide objective evidence if you go down this road.

Set redundancy conditions

The law states you need to give workers a valid reason for cutting back on staff numbers, so make sure you set out exactly why redundancies are being made to avoid any legal problems after the process.

Redundancy payouts

Generally employees who have been let go have the right to receive a statutory redundancy payment (SRP), but only if they have been with the company for two years. You can calculate the SRP by looking at the employee's age, their weekly salary and the amount of time they have been with the firm.

The most important thing to remember about letting staff go is that the maximum SRP is £9,900, so don't pay any more than that under any circumstances.